Suit to require payments under Alabama prepaid tuition program covers all in program, judge rules

MONTGOMERY — A judge's ruling means all 42,000 participants remaining in Alabama's prepaid college tuition plan will be affected by the outcome of a lawsuit seeking to make sure tuition is paid under the financially precarious program.

Circuit Judge Johnny Hardwick ruled the suit will become class-action litigation covering all participants because they face similar legal issues with the Prepaid Affordable College Tuition plan.

A lawyer representing some of the parents who filed the suit said all PACT participants will get a court resolution defining their rights and the obligations of the state.

"Their fortunes rise or fall with this lawsuit," attorney Doyle Fuller of Montgomery said Monday.

The attorney for the PACT board, George Beck of Montgomery, said granting class-action status doesn't mean the judge is going to rule for or against one side. That will only be determined after more court proceedings, he said.

The litigation seeks four years of tuition and mandatory fees for the participants who will be headed to college, and it contends the board has not been paying some fees that are truly mandatory for all students.

The Legislature created PACT in 1989, with the goal of parents paying in a fixed amount of money and their child getting four years of tuition and mandatory fees at an Alabama university. The PACT board, headed by the state treasurer, invested the money and used the earnings to pay college costs.

The program ran into financial trouble in 2009 after tuition rose faster than expected and the steep financial downturn caused the board's investments to lose about half their value.

The parents sued the program last year before the Legislature allocated the $548 million. The PACT board tried to get the suit dismissed after the appropriation, but Hardwick refused. Instead, he granted the parents' request to make it a class-action suit.

Beck said the judge has also agreed to consider a counterclaim filed by the PACT board. Among other things, it asks him to rule on what happens if money runs short, including whether the board can dissolve the program and how it should distribute the remaining funds, Beck said.

When granting class-action status last month, the judge divided the 42,000 participants into two groups based on whether they joined the PACT plan before or after the Legislature revised the PACT law in May 2001.

That's when the Legislature took out part of the PACT law that said the parents' payment allowed their child to go to college "without further tuition costs or mandatory fees." The judge could make separate determinations for